Yabby (my petal) :)

All that is very good if you are thinking in the old economic mindset. Let's try and look beyond the square we have imprisoned ourselves in.

But yes if we take your argument doesn't China need our coal and resources just as much as we seem hellbent on selling the stuff off? China also needs markets.

There is room for mutual negotiation including certain insistence on matters of human rights, blatant lack of transparency on the Hu case just for 'losing face'.

If China wants to play on the world stage it also needs to adapt and it won't happen if other nations are too timid to ask for certain assurances. Many countries like Venuezuela do quite well without pandering to other economic powers.

The only one consideration would be concerns about the build up of defence capability but this can be offset by our own and by close relations with our allies. We don't allow bullying by terrorists we shouldn't also accept it in our trading partners.

*Yabby (my petal) :)*

Sheesh, you made my day now :)

*All that is very good if you are thinking in the old economic mindset.*

Pelican, our economic mindset is reality, which does not go away,
when we dream. You can try it on an individual scale if you like.
Just stop paying your bills. Just borrow more to live. See how
long you last and what the ramifications are.

*Many countries like Venuezuela do quite well without pandering to other economic powers.*

Not so. Venezuela is slowly but surely going downhill, relying on
money from their nationalised oil industry, which they stole.
Result is no new oil wells, equipment slowly going downhill, production slowly sinking. Now they have a power problem, nobody
is investing in Venezuela. The longer they do it, the more they
will go downhill. Cuba tried the same thing 50 years ago, see
where they landed up over time.

*There is room for mutual negotiation including certain insistence on matters of human rights, blatant lack of transparency on the Hu case just for 'losing face'.*

Ah, but you want to put an economic gun to their head, to force them
to follow your cultural standards, taking no notice of their culture,
where "losing face" means everything. That is called Western arrogance. See the big picture here. See how much China has changed
in 30 years! Its been dramatic, but they have to do things at their
pace. You can by all means make your point, but trying economic
blackmail to force them, is the sort of thing over which wars are
started.

Note how upset the Chinese became, when some Americans tried to
force them to revalue their currency. Obama and Geitner both
understand the people skills required in this case. Giving in
to foreign pressure is a huge loss of face in China. They will
do exactly the opposite, just to be shown not to be conceding.

If an economic war broke out between China and Australia, China
would win hands down. Our 20 million market hardly matters to
them.

Heh heh Yabby.

Yabby do you think that Stern Hu should be sacrificed in order to sustain our markets with China? Should we ignore the whole matter and do nothing?

Yes you are right that the realities of our economic system dictate our actions or inactions, but why do we let it? It doesn't have to be so, my urging is for changing the way we operate within those economic systems. We did fine without the heavy emphasis on trade with China in years past.

We are about the 23rd biggest exporter in the world and the 21st biggest importer. The irony in that is we have to import stuff that can very well be grown or manufactured here just so we can export other stuff with this ridiculous pendulum swinging more or less around a substantial trade deficit.

We are currently looking at devastating our apple industry if we allow NZ imports. When does Australia start looking to protect some of its own producers. There is much risk in terms of biosecurity and food security when we continue to degrade and reduce our own production capabilities.

What is inherently wrong with countries having the freedom to make up their own minds what they wish to import or export. If we need widgets and cannot grow or manufacture them here then we import them, but if we have numerous citrus groves or a brilliant climate to be self-sufficient in oranges, we do not need to import oranges (for example). What we gain in exporting say, wheat, we lose in the markets lost for oranges both locally and OS.

It's all very well to proclaim the benefits of free trade but we are not operating on a level playing field in terms of subsidies, closed shop negotiations (eg. EEC) and wage/industrial relations disparities.

I don't want to get too much off topic about Stern Hu but I guess it's all related.

Back to the crux. What do we do about Stern Hu?

Pelican, I've read the best in depth analysis about the Stern
Hu case, on Asia Times Online. But I'll try to stick to the
core points.

There are two sides to it. The first is about taking bribes
to be able to source much cheaper iron ore. On those charges,
everone pleaded guilty, even Rio Tinto acknowledges that they
were guilty on those points. So a jail term on those charges
is in fact acceptable.

The second point is about "industrial espionage" and was
the one conducted in secret. This is the one that business
is now nervous about, for what is a common business tactic
of gaining information and what is a state secret? That
remains obscure and will in fact cost China a great deal,
if they continue to play their present game. Companies will
simply base their people offshore, to protect them and
ultimately China will lose out on business.

Its already happening. I note that Dell computers are looking
at India to source their components, for many companies
are sick of the Chinese laws of the jungle.

In fact its about to cost China billions! The reason that
Vale of Brazil have finally accepted BHPs argument about
iron ore pricing, to change it to market base, rather then annual
cheap contracts, is this very reason. For when the contract
price for a short time during the GFC was higher then the
market price, the Chinese refused to honour those contracts
and there will little that Australia or Brazil could do about
it. So now the boot is on the other foot. Kloppers of BHP
was correct all along and even though BHP are only the number
3 player, he finally got his way, by pure intelligent
reasoning! The net result is that China will have to
pay twice as much for their iron ore from April 1.

So China was so smart that she just shot herself in her
foot and even China will have to accept Klopper's reasoning.

Interesting about Dell, maybe there will be some justice in the market afterall.

The espionage aspect of the trial was closed to any scrutiny and we don't know the facts or the charges. The Chinese know a bit about espionage and bribery too.

The Chinese have only shot themselves in the foot if other nations react with action. Australia hopefully will consider this in further negotiations with China.

If Dell is now to use India in preference and other companies make similar choices that is exerting some sort of economic pressure on China.

On that we do agree. :)

It will be interesting to see how vigilant the legal case will be against the Chinese boat crew on illegally entering the marine park and environmental damage to the Barrier Reef.

China may have shot themselves in the foot regarding international legal and diplomatic negotiations although the one big difference will be transparency.

*The Chinese have only shot themselves in the foot if other nations react with action*

Pelican, its more about how large companies react. They make less
noise then politicians, but it costs China a great deal more money.
Corporations are very wary of investing where there is no transparency. I also think that corporations are learning.
My Sanyo video camera which arrived last week, is made in Vietnam.
My Samsung LED tv is made in Malaysia.

Every time a large corporation now thinks of employing people based
in China, they will think twice and maybe station them in Singapore
and elsewhere.

I know that you are against globalisation, but I think you have
never thought it through properly. We could make just about anything
in Australia, but at what cost? See the two sides of the coin.
Let me take an example. I can buy a standard fleecy cotton shirt
from China for around 7-8$. If the same was made in Australia,
it would cost 40$. Do you think that the poor in Australia,
should all be paying 40$ for their shirts?

Next point. The lamb that I produce is cut up and lands up going
to around 50 countries, including China. The flaps go to South
Africa, the loins go to the US, the legs to Europe etc.
Do you think that all these countries should stop buying my lamb,
to protect their own sheep farmers?